Newcomer Reliance looking to shake up mobile sector

7 May 2003

Reliance Infocomm, the latest player to enter India’s blossoming wireless market, is hoping to establish a presence by offering a raft of low-cost tariff options to customers, although industry watchers are unconvinced that it will meet its ambitious year-end targets. Reliance aims to capture around 20% of all new sign-ups and to this end is offering promotional packages including free incoming calls, cheap outgoing and long-distance calls and subsidised high-end model handsets. However, the three-year lock-in contracts contain a sting in the fine print in that the low prices only apply to calls which are made and terminate on Reliance’s network, and calls to other networks are still subject to rivals’ interconnection rates, which could be high. In addition, analysts point out that in an already fiercely competitive market Reliance’s strategy could be hindered by its poor wireless coverage in some areas, stiff competition from rivals and the fact that it is still awaiting approval from the telecoms watchdog for its revamped service plan. Although Reliance managed to secure over a million subscribers in a ten week marketing blitz in which the rest of the country’s mobile operators collectively added 2.2 million users, it may struggle if the Ministry of Communications and Telecoms Regulatory Authority of India ask Reliance to hike its call rates.